TIME-PREFERENCE § 1. Time as a condition in valuation. 2. The time element in man's provision for his needs. § 3. Cases where future use is preferred. 1 4. Cases where present use is preferred. § 5. Biologic basis for most choice of present use. 1 6. Hope and risk as affecting time-preference. 1 7. Hastening the ripening process. § 8. Postponing the use and the readiness for use. § 9. Physical change accompanying time-change. Note on Present and future goods, uses, desires.
§ 1. Time as a condition in valuation. Let us recall here that every object of choice is characterized, or qualified, in some way with reference to its staff, form, place, and time; and according as our attention is directed toward the one or the other quality we speak of the stuff-, form-, place-, and time value. Time-value now calls for fuller consideration.
The luscious fruit on the table makes a certain appeal to us, is valued, as compared with anything else. Why? Partly because of the physical and chemical elements of which it is composed, partly because of the particular form in which those elements are combined, partly because the fruit is close at hand rather than in some distant place, and finally because it is available at the present moment rather than at some future time.
The man who is suffering the pangs of starvation desires food, and he desires it at once. The promise of a good meal at some time in the distant future makes no appeal to him. In great extremity he will pay for food any price within his power. "AR that a man hath will he give for his life." A loaf of bread put into his hands at the present moment would 235 mean more to him than the promise of a whole bakery a year from now. A grasping person, willing to take advantage of him, might get from him a promise to pay almost any sum in the future for present bread. He might agree to pay back at • the end of a year five loaves, or ten loaves, or almost any num ber of loaves in return for the single loaf now which will save his life.
We are dealing here with a case of time-preference. The food is preferred at one time rather than another, in this case at present rather than in the future. An extreme case has been cited for purposes of illustration, but it is possible every day and almost every hour to observe cases involving the same kind of preference, that for present goods as compared with an equal amount of like future goods, and other cases where like goods are preferred in the future rather than at present. In every conjuncture of human life, the timeliness of goods is an ever present factor in their valuation, and often it is of the very greatest significance. The demands of consumers always have reference to a particular time, and the business man is always seeking to supply goods at the right time as well as of the right stuff and form and in the right place. Palm leaf fans are not marketed in winter time, nor overcoats and furs in summer. The promissory note must be paid when due. The bond has a greater value just before an interest payment than just after. And from these limitations of time, as from those of space, there is no escape. A man can not be in two places at once, nor can he command the sun to stand still and halt the passage of time.
§ 2. The time element in man's provision for his needs. If the needs of men were supplied from day to day by some outside agency, if the things we need fell like manna from the skies, or if man lived the uncalculating life of some ani mals, there would be no such thing as time-preference or time value. The lowest animals live entirely in the present. Their whole activity consists in appropriating whatever agreeable things, or rejecting whatever disagreeable things, are at the mo ment within their And with few exceptions even the higher animals live very largely from day to day, as did primi tive men and as some men do still in the midst of modern civilization. For these the desires of the present engross al most the entire attention.